The past few weeks we looked into the Sigmoid curve and realised that we need to begin working on renewal of our company before performance of our present operations begins to drop off. While we often find solutions in working harder, instead we may to work smarter. While we normally concentrate on what we are doing today, the fact that our environment and the conditions we work in are constantly changing, requires us to pay attention not only to improving our present operations but also to designing for the future. In other words, we must have two strategies operating at once. We must allow the past and the future to coexist in the present as few business owners have the luxury of being able to shut down their business while they transform it. This is like rewiring a house, while leaving the electricity on. There is some danger but if you want electricity throughout the changeover period, you have little choice. We saw that the road to the future begins by improving that which already exists or making the company as good as it can possibly be at servicing its present customers in the present market. Answering the following sets of may help questions:
Who are the present customers and why do they buy from us instead of our competitors?
Are the needs of the customers changing and if so what is driving those changes?
How can we use those changes to our advantage?
Who are our present competitors and why do customers choose them over us?
Are the rules of engagement changing and if so what is driving those changes?
How can we use those changes to our advantage?
If our present customers were to redesign our company, what would they turn it into?
How can we use the latest technological advances to our advantage?
How can we strengthen our relationships with our key customers, suppliers and business partners?
In studying these questions and trying to make sense of the answers we are in fact developing a new vision for the future and prepare the company for how it can get there.
An organization that still resembles the past must generate a vision of the kind of organization you now want it to become. What exactly is that vision? Defining the purpose of the organization may help. What is the business you are really in?
Your business should be defined, not in terms of the product or service you offer but in terms of what customer need your product or service fulfils. While products come and go, basic needs of customers remain, for example the need for communication, transportation, food, etc. The description of the market need should be broad, rather than narrow. If for example the weekly newspaper that we are reading only thinks of its business as printing and selling the newspaper every week, it may begin losing business fast while the ICT world around it is developing at a staggering pace. But when the company’s purpose is defined as providing up to date news to the public, it widens its horizon, and may include other ways of reaching its customers like a website, social networks etc. Here follow some examples of product-based versus customer-based definitions:
Product-based Telephone company
Running an airline
Generating electricity Selling tickets
Provider of communications
Transporting people and goods
Providing clean and affordable energy
Providing travel services
Thinking about purpose instead of about a specific product helps us to expand our horizon. Regardless of the product, people will always have certain needs. We do not want to get caught in producing a product or service that people no longer want. When you think “What business am I in?”, ask yourself:
What are our principle products or services?
What are some possible substitutes for these?
Why do customers buy these products or services?
What are the principle benefits they expect from these purchases?
Once you have clarified customers’ needs, you can think about how you have shaped or will shape the organization to meet these needs. Next week we will look more into how to do this.
Back to the realization above that, while designing for the future we must continue to pay attention to improving our present operations. This is a real point of concern in Ethiopia as I often notice that while something new is being introduced and while the new product or service is not yet fully worked out, tested and functional, the “old” product or service is suddenly ignored. I think of the introduction of new rules and regulations, internet services, electricity supply, to mention a few. Meanwhile products and services leave much to be desired and customers suffer. In a competitive environment some companies would soon be out of business indeed.